Macro Morning

See the latest Australian dollar analysis here:

Macro Afternoon

By Chris Becker 

Another bullish day to be expected here in Asia with another record high on Wall Street overnight pushing the risk complex along with tech stocks leading the way. The poor US jobs print from Friday seems to have been forgotten as focus shifts more to risk taking, but currency markets were relatively stable as the USDJPY proxy lifted slightly while the oil price dropped on a possible Libyan peace deal.

Looking at Asian share markets performance from yesterday, where the Shanghai Composite advanced slightly and then jumped higher at the close, finishing up 0.7% to be over 3100 points, starting 2020 with a bang. Meanwhile the Hang Seng Index continued its own little advance, climbing 1.1% to 28954 points, still very well supported and making new highs for the year. The daily chart shows price action is getting a little ahead of itself with price remaining well above the high moving average and momentum climbing which should support a continued uptrend, but watch out for the inevitable reversions to mean:

Japanese share markets were closed for a long weekend,  but should advance when they reopen with Nikkei 225 futures pushing up to the 24000 points level. I still contend there may not be much potential upside with the former high not far away, but watch the positively correlated USDJPY for signs of a breakout first:

The ASX200 was the worst in the region, pulling back after recently making a new record high by closing 0.4% lower to 6903 points. SPI futures however are up over 30 points on the rebound on Wall Street as the Aussie dollar moderates somewhat, so we’re likely to get a second round of matching the previous record high before another breakout:

European markets had a wobbly start to the week with no real direction, as the uptick in Euro curbed risk enthusiasm. The German DAX slipped 0.25% to 13451 points, again failing to make a new daily high. Daily support at 13000 or so remains solid, but the previous upside resistance at the 13450 level is only hesitantly broken. I’m still watching for another session above the high moving average and to see how a higher Euro affects these markets:

Wall Street released the brakes put on post-NFP on Friday night, with the temporary mild retraction unable to hold back the hyper-long positions, with the S&P500 lifting 0.7% to 3288 points. The daily chart shows new record highs are being beat by further new record highs, so while overall price is way overextended, you can’t hold back a hyper bull market:

Currency markets reduced their volatility compared to Friday night with USD moderating against the majors. Euro pushed a little higher and remains above the 1.11 handle but this remains a long swing play only for now until overhead ATR resistance at 1.1140 is broken:

The USDJPY pair has finally broken free of the previous daily/weekly high at the 109.60 level in what should be very supportive not just for domestic Japanese stocks but the whole region. Momentum did not invert as I expected and has pushed price up towards the 110 level:

The Australian dollar has stalled out again at the  69 handle after briefly testing overhead ATR resistance overnight. Momentum is barely positive either so while the previous breakout is good on the face of it, I still say the technicals are not clear yet for a bull run as hesitation around the direction of the RBA is still building:

Oil prices continue their selloff as a potential peace deal in Libya brokered by the Russians is helping deflating the big Iranian crisis buildup, with the WTI contract falling sharply to settle just above the $58 per barrel level. I though this was not yet a full selloff even though price was well below daily ATR support and momentum had inverted, so I got this wrong and the shorts are piling in here!

Finally to gold, which is also suffering from some deflation from its recent almost bubble like performance, falling back to the $1547USD per ounce level after briefly being above $1600. The daily chart is slowly letting air out of the bubble, but watch ATR support at the $1540 level that must hold or a selloff could eventuate as the short positions pile in:

Glossary of Acronyms and Technical Analysis Terms:

ATR: Average True Range – measures the degree of price volatility averaged over a time period

ATR Support/Resistance: a ratcheting mechanism that follows price below/above a trend, that if breached shows above average volatility

CCI:  Commodity Channel Index: a momentum reading that calculates current price away from the statistical mean or “typical” price to indicate overbought (far above the mean) or oversold (far below the mean)

Low/High Moving Average: rolling mean of prices in this case, the low and high for the day/hour which creates a band around the actual price movement

FOMC: Federal Open Market Committee, monthly meeting of Federal Reserve regarding monetary policy (setting interest rates)

BOJ/Abenomics: Bank of Japan, economic policy/direction enacted by PM Shinzo Abe

DOE: US Department of Energy 

Uncle Point: or stop loss point, a level at which you’ve clearly been wrong on your position, so cry uncle and get out!

Latest posts by Chris Becker (see all)

Comments are hidden for Membership Subscribers only.